IMO 2020 Watch™
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IMO 2020 Watch™ As of April 2018, PKVerleger LLC (Twitter: @pkverlegerllc) has been posting summaries of relevant articles focusing on the International Maritime Organization’s imposition of the 0.5-percent sulfur limit on marine bunker fuel. (Note: Right-click on links to open in a new browser window.) March 6, 2020 Hellenic Shipping News Weak European refining margins prompt run cuts, crude values slide “Weak middle distillate margins as a result of of COVID-19 and IMO 2020 have seen some European refiners cut throughput ahead of the traditional spring maintenance season, hitting values for North Sea crude.” March 5, 2020 Hellenic Shipping News Ports begin enforcing bunker fuel carriage ban “Port enforcement agencies in the U.S. and around the world tightened their oversight of the IMO 2020 low-sulfur fuel regulation on March 1 to include detaining and penalizing ships found to be carrying noncompliant fuel.” March 4, 2020 Jeff Fick, S&P Global Platts Brazil’s Petrobras sets record for bunker fuel exports in February “Brazilian state-led oil producer and refiner Petrobras set a fresh monthly record for bunker-fuel exports in February, after the company made a strategic shift to enter the global market as a key supplier, it said in a statement Wednesday.” Devika Krishna Kumar, Julia Payne, Dmitry Zhdannikov, Reuters Oil traders hit by unexpected slump in gasoil “After strong profits in 2019, oil traders have been hit hard early in 2020, losing tens of millions of dollars on bets on gasoil price spreads due to an unexpected collapse in demand in January, sources familiar with the matter said.” IMO 2020 Watch™ March 3, 2020 Ship & Bunker Finnish Refiner Neste Sees Limited IMO 2020 Boost to Middle Distillates “Finnish refiner Neste has been disappointed with the effect IMO 2020 has had on middle distillate prices so far.” Ship & Bunker Panama Bunker Sales Climb Further at Start of IMO 2020 “Bunker sales in Panama climbed by 8.8% in January as the shipping industry moved into using new very low sulfur fuel oil (VLSFO) blends, according to the Panama Maritime Authority (AMP).” Jack Jordan, Ship & Bunker FEATURE: What IP Week Told Us About the Bunker Industry “The IP Week events at the start of IMO 2020 were supposed to take on a celebratory tone for the bunker industry…. It didn’t quite work out that way.” March 2, 2020 Argus Media Panama MGO sales up but VLSFO demand dominates “January 2020 0.1pc sulphur marine gasoil (MGO) sales at the Panama Canal accounted for 14pc of total marine fuel demand and 86pc of residual fuel oil. The share of MGO sales in Panama was up from 9pc in January 2019 and January 2018 and 11pc of total marine fuel sales in 2019.” Emma Broadhurst, Bunkerspot Asia Pacific: India’s LSFO Supply Feeling the Pressure from IMO 2020 “Shipowners are facing initial challenges with the supply and availability of very low sulphur fuel oil (LSFO) in India, highlights CRISIL.” John Gallagher, American Shipper Ports begin enforcing bunker fuel carriage ban “Port enforcement agencies in the U.S. and around the world tightened their oversight of the IMO 2020 low-sulfur fuel regulation on March 1 to include detaining and penalizing ships found to be carrying noncompliant fuel.” Port Technology Port authorities vow to heavily enforce latest IMO rules “The US Coast Guard (USCG) and many of its international counterparts have said they will clamp down heavily on vessels that break the latest IMO rules on the carriage of non-compliant fuel.” 2 | Page IMO 2020 Watch™ Ship & Bunker HSFO Carriage Ban Comes Into Effect “The International Marine Organization’s long-awaited ban on the carriage of non-compliant fuels came into effect over the weekend, which may prompt the shift of a few more dregs of high-sulfur fuel oil (HSFO) demand into the new very low sulfur fuel oil (VLSFO) blends.” Hellenic Shipping News Fujairah delivered marine fuel 0.5%S hits record low for second time in 2 days on coronavirus “Fujairah delivered marine fuel 0.5%S tumbled $30/mt day on day to hit a fresh record low of $420/mt — from the previous record low hit the day before — as the coronavirus outbreak continued to impact demand, market sources said.” February 29, 2020 Hellenic Shipping News Sailing on low sulphur: LSFO more viable option for shippers in long run “The International Maritime Organization (IMO) has mandated the use of low-sulphur fuel oil (LSFO; 0.5% sulphur) by ships replacing high-sulphur fuel oil (HSFO; 3.5% sulphur), with effect from January 1, 2020. To be compliant, ship owners have two options: use LSFO, or continue to burn HSFO by equipping ships with exhaust gas cleaning systems called scrubbers. So far, only 5-10% of the global fleet (by number of vessels) is estimated to have installed scrubbers, and by the end of 2020, this is expected to improve to only 10-15%. In other words, shippers are preferring a switch to LSFO.” February 28, 2020 Lesley Bankes-Hughes, Bunkerspot Global: Credit Crunch Could Bite as IMO 2020 Fuel Payment Deadlines Loom “While the IMO 2020 transition appears to have been relatively smooth, as invoices fall due for the more expensive IMO 2020-compliant bunker fuels lifted at the start of the year ‘then we will see whether there is the amount of credit available in the market that we think,’ cautions LQM Petroleum's sales manager, Neil Lamerton.” Jack Jordan, Ship & Bunker ANALYSIS: COVID-19 Eliminates IMO 2020 Cost at Rotterdam as VLSFO Drops Below 2019 HSFO “Economic headwinds from the COVID-19 virus outbreak have overcome increased fuel bills from IMO 2020 for the first time.” Lesley Bankes-Hughes, Bunkerspot High and Low Sulfur Fuel Prices Tumble since IMO 2020 Tipping Point “Prices for 380 cSt high sulphur fuel oil (HSFO) and IMO 2020-compliant low sulphur product have cooled significantly from the beginning of January, with the long-anticipated (and hoped for) spread 3 | Page IMO 2020 Watch™ between marine gasoil and very low sulphur fuel oil (VLSFO) becoming increasingly evident, while prices have plummeted across the board in the last week of February as the impact of coronavirus increasingly slows global trade and drives travel plan cancellations.” Rajesh Nair, Atsuko Kawasaki, Amy Tan, S&P Global Platts Post-IMO 2020: Asia Marine Fuel 0.5% valuations on a roller-coaster ride “S&P Global Platts refined oil products experts Atsuko Kawasaki, Amy Tan, and Rajesh Nair examine the rapidly changing fortunes of the Asian Marine Fuel 0.5% market, which has seen a fundamental shift since International Maritime Organization's mandate to limit sulfur in marine fuels to a maximum of 0.5% kicked off from the start of the year.” February 27, 2020 Mike Wackett, The Loadstar Ocean carriers unlikely to recover the full cost of IMO 2020 compliance “Notwithstanding the significant impact to the bottom line of ocean carriers from the coronavirus outbreak, it is also becoming increasingly apparent that they have failed to pass on all of the extra cost of IMO 2020 cleaner fuel legislation to their customers.” Jack Wittels, Bloomberg Dodging Environmental Rules Is About to Get Harder for Shippers “A tweak to new environmental rules for the shipping industry is just days from taking effect, closing off a loophole for would-be cheats looking to cut their fuel bills.” February 25, 2020 Jason Jiang, Splash247 IMO 2020 and demolition volumes “The new IMO sulphur regulations, coupled with continued recession in the dry bulk chartering market, has forced owners to push a large number of less fuel-efficient vintage ships to scrapyards in the first two months of this year. The trend is expected to be sustained in the first half of this year, as a result of the outbreak of coronavirus in China, which could have a further downward impact on the freight market.” February 24, 2020 Barry Parker, Seatrade Maritime News Navigating uncertainty – IMO 2020 “In the wake of IMO 2020, the Chinese New Year and the coronavirus, the more than usual uncertainty has generated rough sailing throughout all sectors of shipping.” 4 | Page IMO 2020 Watch™ Paul Hickin, S&P Global Platts Coronavirus impact masking post-IMO 2020 risks for marine fuels “Potential risks from the fallout of IMO 2020 are lying dormant as the industry stares down the immediate challenge of a sharp downturn in global seaborne trade.” Hellenic Shipping News Shippers hit with extra costs, vessel issues amid IMO 2020 “Chemical tankers are facing extra costs and problems with vessels due to the switch to low sulphur fuel oil (LSFO) on the back of the IMO 2020 regulations, according to industry players.” Amy Tan, S&P Global Platts Singapore LSMGO-LSFO spread doubles in 2 weeks as demand swings back to LSFO “The spread between Singapore delivered low sulfur marine gasoil and low sulfur fuel oil more than doubled to average $10/mt last week from $4.60/mt over February 1-7 as buyers increasingly switched back to LSFO amid an increase in availability, S&P Global Platts data showed Monday.” February 23, 2020 Mia Bennett, The Maritime Executive Ban on Heavy Fuel Oil in Arctic Shipping Moves Ahead “An IMO working group has recommended to ban the use of heavy fuel oil in Arctic shipping, with some key exceptions, starting from July 1, 2024.” Dan Colover, OilandGasMiddleEast.com Fujairah shows how Middle East has adapted to IMO 2020 low-sulfur fuel rule “The global oil and shipping industries faced new challenges and opportunities with the start of a new decade as the International Maritime Organization imposed lower sulfur caps on fuels used on the high seas.